Filling the leadership void on a quest to pick our industry's fuel champion

Filling the leadership void on a quest to pick our industry's fuel champion

Date: 13/02/2023

The shipping industry is responsible for around 940 million tonnes of carbon emitted annually, roughly 2.5-3% of the world's total CO2 emissions, according to data collected in 2021. And with the International Maritime Organisation (IMO) turning up the heat on the industry by setting a new target of cutting 50% of carbon emissions by 2050, the pressure to decarbonise is palpable.

However, as we assess the state of the industry's current efforts, the road to achieving the IMO's target looks rocky at best. While most companies in the industry have rallied behind these ambitious goals – both as a good ESG business practice and as a necessity in a rapidly tightening policy environment – we see limited cross-collaboration and tunnel vision.

Fragmented thinking and siloed solutions, despite their best intentions, risk undermining finding a viable path forward. This is especially true when we talk about the most critically important aspect of decarbonisation – fuel.

The shipping industry is one of the most interconnected industries: along the supply chain, ships need a common fuel, ports need to have it ready to fuel to the ships, and energy firms need to produce it at scale and cost. The absence of a chosen green fuel that has the capacity to sustain our journey towards 2050 is a pressing reality we need to change.

Like the Betamax versus VHS debate of the 1980s – or the Blu-ray versus HDDVD debate of the late noughties – what we see today is a landscape of competing green fuels: from transitory LNGs and ammonia to wind-powered ships, we are seeing a clear lack of common direction necessary to hit those targets. Cargo owners and shipping lines influence the trade industry in more ways than one, and their fragmented approach to picking a green fuel complicates portside operations. Port operators need to be ready to service their customers with the infrastructure and fuel necessary for ships to berth, but without a clear green energy of choice, how can operators support the industry's decarbonisation and their customer's sustainability journeys? 

What's more is that the absence of a clear fuel "winner" has highlighted a leadership vacuum within the industry. As a logistics provider, operator that connects the dots of global trade, and industry collaborator, DP World has a potentially significant role to play in this vacuum, rallying the rest of the industry behind a green fuel source.

Key Challenges To Shifting To Green Energy

While change is difficult, it's necessary – for the industry and for our world.

Before we even begin considering the selection of green fuels available to the industry, there are five key challenges to transitioning to green fuel – a selection criteria, to put it plainly.

As an industry we need to ensure compatibility of fuel across global ports, ships and supply chains, and the scalability of future fuel production; to make the necessary technology and engineering accessible; develop appropriate infrastructure; and rally behind a leader that can speak for and convene the industry behind a green fuel.

The landscape certainly looks daunting if we address this laundry list in one sitting. However, there is optimism in knowing that certain challenges are already being tackled. For example, investment in green technology has grown in recent years, and in 2021, renewable energy took up the lion’s share of new investments, a total of $368 billion worldwide. Investment in green transportation also surged, reaching $273 billion, or 77% more than had been invested the year prior.

Increased appetite for investment opportunities in green fuels will undoubtedly widen the market, making investing in engineering and research and development equally as attractive. Scalability, being one of the most pressing issues preventing widespread adoption of green fuel by shipping lines and cargo transporters, will surely benefit from the private sector attention.

So, the data looks promising, but there are still portside obstacles that prevent the industry from getting a much-needed fuel change. Fuel compatibility between port and ship, and between international ports, is lacklustre at best. Ports operators want to service their customers as best they can while committing to sustainable solutions but are siloed by physical distance and discouraged because of the competition for a limited number of customers – shipping lines and cargo owners – they face.

Furthermore, certain ports can rely on government subsidies and incentives to cover the additional costs that come from switching to green fuels.

And while fuel change can come about through internationally coordinated pressure from regimented policy environments, it can also happen with clear stewardship from a convening voice.

What is DP World doing?

As far as a convening leader goes – an industry insider – there may be a solution, right under our noses. DP World's network, as the world's leading global end-to-end logistics provider means that we are interconnected with every player along the supply chain – from factory floors to end customer's doorsteps. This also means we have a clear responsibility to our customers, our partners, and the world to look for alternatives that can speed up decarbonisation within the industry.

The approach we have taken is quite complex, but my colleague Enoma Woghiren summarised it perfectly in his interview with World Cargo News recently: like Swiss cheese, our pillars lay on top of each other to fill the gaps, or 'holes' as it were, to failproof our decarbonisation strategy. The strategy is composed of five layers: electrification, process efficiency and digitization, renewable energy supply (where possible), use of low carbon fuels, and, as a last resort, carbon compensation.

In Europe, we see our strategy in action every day. One of the pillars of DP World's decarbonisation strategy is electrification: this includes replacing its global fleet of assets from diesel to electric, investing in renewable power and exploring alternative fuels. The electrification of DP World's ports and terminals equipment is already happening, as evidenced by the London Gateway's first electrical tractor of an incoming fleet. DP World Southampton was the first to mass implement HVO fuel – a low carbon, drop-in alternative to diesel – reducing emissions at our port by over 80%.

Across the North Sea, Rotterdam World Gateway has already committed to carbon neutrality by 2024 without relying on offsets – and will become the first carbon neutral terminal in the world without offsets. And our multimodal terminal in Antwerp, Belgium runs on 100% green energy. We have also reduced our CO2 emissions overall by 51% since 2013 at Antwerp, much of which has been due to investment in hybrid straddle carriers and Automated Stacking Cranes (ASCs), which are also increasing capacity while reducing energy expenditure.

On fuel, DP World-owned Marine Services business, Unifeeder, is already making enormous strides by assisting in the world’s first marine trial of synthetic LNG – a zero-carbon form of LNG that is produced using wind power.

These are just some examples of the work we are currently doing at DP World Europe. Globally, DP World committed to carbon neutrality by 2040 and to net zero by 2050, and 28% reduction by 2030.

We are showing time and time again that a leader can speed up change. But we also know that choosing a green fuel for the future is not an easy task and we cannot do this alone.

That's why we are proud to be the only ports and terminals operator that has signed a strategic partnership with the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping. We believe strongly that this partnership will foster the development of zero carbon technologies and solutions for the maritime industry and convene industry heavyweights and decision-makers.